With foreign private equity funds actively buying local firms, the financial regulator could tighten buyout rules as it considers allowing minority shareholders to veto buyout offers.
"In light of increasing management buyout deals or offers by overseas private equity shops of late, we have been considering amending the regulations with reference to rules in Hong Kong," Financial Supervisory Commission spokeswoman Susan Chang (張秀蓮) said yesterday.
Chang said the regulator hoped to find a balance between better protection of minority shareholders and an accommodating environment for mergers and acquisitions.
A management buyout (MBO) signifies that a company will go private through the purchase, by management, of a majority or all outstanding shares from shareholders.
The Economic Daily News reported yesterday that the commission had suggested that the Ministry of Economic Affairs amend the Business Mergers and Acquisitions Law (企業併購法) and allow minority shareholders controlling a combined 10 percent stake to veto takeover proposals.
"We plan to require higher transparency and full disclosure of terms in the MBO cases, as well as evaluation of offers by a third party if necessary," Chang said.
The commission will instruct its subordinate bureaus to study the plan's feasibility and tender the results for discussion, Chang said.
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